A guide to help you understand what the Microsoft New Commerce Experience (NCE) is, how it affects the licenses you buy, and the benefits of moving to NCE from an Enterprise Agreement (EA).
If you are a nonprofit organisation that uses Microsoft 365, you may have heard of the New Commerce Experience (NCE) that Microsoft launched commercially in 2020, and that is now coming to the nonprofit sector this year.
In a nutshell, the NCE model means that charities will pay 20% more for their current licenses if they stay on monthly flexible terms. Or they can fix for a year and lock the price – and the quantity – in.
NCE therefore offers cost savings for long term commitments, whilst introducing additional features to make purchasing through Cloud Solutions Partners (CSPs) such as Smartdesc a comparable alternative to the longstanding Enterprise Agreement (EA), which have always only been available direct from Microsoft on a minimum of 3-year terms.
NCE has some significant advantages over the traditional Enterprise Agreement that you may be using now, and/or the pay-as-you-go monthly model that many charities use and which are subject to price changes at short notice.
In this blog post, we will explain what the NCE is, how it works, and why you should consider moving your Microsoft licenses from EA to CSP.
What is the New Commerce Experience?
The NCE is a new pricing model that Microsoft introduced to simplify and streamline the licensing process for Microsoft 365 customers. The NCE aims to provide more flexibility, transparency, and cost savings for customers who purchase their licenses through CSPs, which are partner resellers like Smartdesc that offer value-added services such as self-service portals, help and advice on all Microsoft products.
The NCE also aligns the pricing of Microsoft 365 licenses with the market value and demand, which means that some license prices may increase or decrease depending on the features and benefits they offer. However, as a nonprofit organisation, you can still access the discounted nonprofit pricing that Microsoft offers for eligible organisations, regardless of the license type you choose.
How does the NCE work?
The NCE works by offering two types of licenses: annual commit and monthly flexible.
Annual commit licenses are cheaper and require a one-year commitment (i.e. you cannot reduce the quantity over the year, although you can increase mid-term and keep the same renewal date), while monthly flexible licenses are about 20% more expensive but can be cancelled or quantities reduced at any time.
Customers can mix and match these two types of licenses depending on their needs and budget. For example, you can purchase annual commit licenses for your core staff who need Microsoft 365 all year round, and monthly flexible licenses for your volunteers or project-based workers who only need it for a short period of time. This way, you can optimize your license usage and avoid paying for licenses that you don’t need. Note: all invoicing continues to be monthly regardless.
Why should you move your Microsoft licenses from EA to CSP?
- A key benefit is gaining access at no additional cost to your own Self Service Portal. This integrates with our invoicing system so invoices are simplified, and you can see in real time your exact spend and allocation, plus make changes such as adding and removing users quickly and easily. It greatly speeds up license allocation and simplifies invoicing.
- It can be cheaper to use a CSP such as Smartdesc for NCE. This is because as a Tier 1 partner, Smartdesc get preferential pricing compared with buying from Microsoft directly under an EA agreement and/or the old pay-as-you-go model, which is being phased out this year anyway.
- You protect yourself against mid-term price rises by using NCE annual commit. The per-unit price is locked in for the entire year, regardless of price changes, meaning you can budget with confidence.
- If you still want the option to reduce licence count anytime (for example if a volunteer project is likely to close in the next year), you can still allocate monthly flexible licenses to those users, and remove them when they are no longer required. The monthly licences will be slightly more expensive whilst they are in use, but will be removed when cancelled.
- You will still benefit from the full nonprofit discounts that Microsoft offers for eligible organisations, which can save you up to 75% off the commercial prices.
- You can easily transfer your licenses from one CSP partner to another if you are not satisfied with their service or pricing, without breaking your annual commitment to Microsoft. You can also manage your licenses yourself through a user-friendly portal that lets you view, add, remove, or change your licenses at any time.
- You will still have full access to all the latest features and updates that Microsoft releases for Microsoft 365, without having to wait for your EA renewal cycle.
- You can benefit from the value-added services and support that your CSP should offer. Smartdesc is a trusted CSP that has extensive experience and expertise in Microsoft 365 for nonprofits. Smartdesc can help you with the migration process with zero downtime, provide you with ongoing technical support, and advise you on the best practices and solutions for your Microsoft 365 environment to keep costs optimised.
What are the challenges and risks of staying on EA?
If you decide to stay on EA, you may face some challenges and risks that could affect your Microsoft 365 experience and budget. Here are some of the drawbacks of staying on EA:
- You may pay more than you need to for your licenses. EA pricing is typically based on a three-year agreement that locks you in to a fixed number of licenses and a fixed price per license. This means that you may end up paying for licenses that you don’t use
- You may have less flexibility and control over your licenses. EA agreements are not easy to change or cancel, and you may have to pay penalties or fees if you want to do so. You may also have to wait for your EA renewal cycle to access the latest features and updates that Microsoft releases for Microsoft 365, which could put you at a disadvantage compared to CSP customers who can access them as soon as they are available.
- You may have less support and service from your EA partner. EA partners are not required to provide any value-added services or support for Microsoft 365, and they may not have the expertise or experience to help you with the migration process, the technical issues, or the best practices and solutions for your Microsoft 365 environment. You may also have to deal with multiple vendors and contracts for your Microsoft 365 licenses and other IT services, which could complicate your management and administration.
What are the next steps?
If you purchase your Microsoft licenses via a CSP now, or pay monthly direct to Microsoft, the NCE model is being introduced starting September 2024 and is mandatory, so a change has to happen.
If you have an EA in place now and want to explore what savings could be possible by moving to CSP, you can contact Smartdesc today and get a free consultation and quote.
If you don’t know quite how you procure your Microsoft licenses, or use a bit of some or both of the above, contact us for a free consultation. Smartdesc will ask for read-only access to your Microsoft tenant, assess what you have, help you understand the NCE, and plan out a new license model that optimises cost and functionality.
We will guide you through the steps and requirements for the migration, and provide you with a detailed breakdown of the costs and savings that you can expect from the switch, plus answer any questions or concerns that you may have.
